Co-op repair may take five years, new boss warns

Reviving the beleaguered Co-operative Group after two years of turmoil could take as long as five years, the new head of the business declared today.

The Co-op — whose former boss Euan Sutherland branded the business “ungovernable” — has called on Richard Pennycook as its new, permanent chief executive, less than five months after it gave up control of its controversial bank which had a £1.5 billion black hole.

The wider group narrowed pre-tax losses to £9 million in the half-year to July 5, vastly improving on last year’s £2.5 billion loss.

Pennycook — the interim boss who previously said he had no intention of taking on the job full-time — laid out a five-year plan for the mutual, likening the Co-op to a sick hospital patient.

He said: “We’re out of the operating theatre and in the recovery room. In time we’ll be on our feet again.”

But he also warned that the mutual is braced for a three-year “rebuild” phase and further two-year “renewal” phase following a year of scandals and fallouts which saw its bank chairman, Paul Flowers, plead guilty to possession of cocaine, crystal meth and ketamine.

Debts hit an incredible £1.4 billion last year but a series of disposals, including its pharmacy, farming and security businesses in recent months, will cut back the debt pile significantly this year.